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You’ve graduated from law school. You’ve landed a job as an attorney. Now you want to buy a house and cement your status in the professional class. But can you afford it? Probably not — unless you can count on earning three times your annual tuition, assuming you’re borrowing the money. That’s according to University of Louisville Louis D. Brandeis School of Law Dean Jim Chen. In an academic paper, “ A Degree of Practical Wisdom: The Ratio of Educational Debt to Income as a Basic Measurement of Law School Graduate’s Economic Viability,” Chen uses qualification for a home loan while paying off student debt as a measure of whether a legal education makes economic sense. Too often, prospective students focus only on the highest-reported salaries of a certain schools’ graduates and don’t investigate the long-term economic realities of financing their education, Chen said. “There is obviously a lot more that goes into the decision to attend law school, but you look around the world right now and everyone is paying attention to debt-to-income ratios,” he said. “I wanted to offer some guidance to people contemplating law school.” Using the debt standards set by mortgage providers as guidelines, Chen concluded that law graduates need to earn three times their law school tuition annually to enjoy what he termed “adequate” financial viability. That assumes they borrow only the amount of their law school tuition and lack additional debt — a conservative assumption, Chen said. Thus, graduates of relatively low-cost schools charging annual tuition of $16,000 would need to earn $48,000; graduates of schools charging $32,000 would need to earn $96,000; and graduates of schools charging $48,000 would need to earn $144,000. To maintain a “good” level of financial viability — meaning they could easily secure loans and would be very financially secure — graduates must earn six times their annual tuition, Chen calculates. That means graduates of $16,000-a-year schools would need to earn $96,000; graduates of $32,000 schools would need to earn $192,000; and graduates of $48,000 schools would need to earn $288,000. To maintain “marginal” financial viability, graduates of $16,000-a-year schools would need to earn at least $32,000; graduates of $32,000 schools would need to earn $64,000; and graduates of $48,000 schools would need to earn $96,000. According to the National Association of Law Placement, new law graduates earn, on average, $68,500. That means many would be unable to purchase a home and repay their loans, according to Chen’s analysis. Lenders generally frown on educational debt that represents more than 8 percent to 12 percent of the borrower’s monthly gross income, he wrote. Chen paper is slated to appear in a future edition of the William Mitchell Law Review, he said. “I was trying to think of a simple way to capture some of the growing discomfort over the economics of the decision to attend law school,” he said. “At a bare minimum, you should not borrow so much money that you can’t afford a house.” Contact Karen Sloan at [email protected].

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